India’s ONGC looks set to defer the development of two deepwater blocks in the Mahanadi basin off the country’s east coast.
In a slightly worrying decision for future deepwater developments there, an unidentified director on the board of ONGC went public to tell one of the Indian national papers that the state-run operator was deferring development plans for blocks MN-DWN-98/3 and MN-OSN-2000/2. A total of approximately 1 Tcf of gas has been found in these two blocks, but due to current gas prices the reserves are not viable, it believes.
The director said the operator’s focus was rather on monetising projects that can boost stagnant production at current prices at a faster rate than spending resources on deepwater acreages, with the heavier initial investment required and potentially lower returns in the present gas price environment.
The present Indian government has yet to implement a planned new pricing regime, deferring it till mid-November, which could potentially raise prices to a more viable level for new developments.
The ONGC director said that the focus would be on projects including Daman, a third-phase redevelopment of Mumbai High, the prolific KG-DWN-98/2 deepwater block in the Krishna Godavari basin, and additional development of the South Bassein field in the western offshore sector.
Both the MN-DWN-98/3 and MN-OSN-2000/2 blocks were awarded to ONGC in one of the last NELP licensing rounds. The company has made at least four discoveries in the blocks, and was originally looking to carry out an integrated development. A declaration of commerciality for the blocks has already been submitted to the national regulator, the Directorate General of Hydrocarbons.
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